Good afternoon and welcome to PennyMac Financial Services' first quarter 2025 earnings call. Additional earnings materials, including presentation slides that will be referred to in this call, are available on PennyMac's financial website at pfsi.pennymac.com. Before we begin, let me remind you that this call may contain forward-looking statements that are subject to certain risks identified on slide two of the earnings presentation that could cause the company's actual results to differ materially, as well as non-GAAP measures that, have been reconciled to their GAAP equivalent in the earnings materials. I'd now like to introduce David Spector, PennyMac Financial Services' Chairman and Chief Executive Officer, and Dan Perotti, PennyMac Financial Services' Chief Financial Officer. Thank you, Operator. Good afternoon and thank you to everyone for participating in our first quarter earnings call. For the first quarter, PFSI reported net income of $76 million for diluted earnings per share of $1.42 for an annualized return on equity of 8%. Excluding the impact of fair value changes, PFSI produced an annualized operating ROE of 15%, driven by continued strength in our servicing business and a solid contribution from our production segment despite elevated mortgage rates. In total, loan originations and acquisitions were $29 billion in unpaid principal balance, driving the continued growth of our servicing portfolio to $680 billion in unpaid principal balance with 2.7 million households. Before reviewing our quarterly results in greater detail, I would like to highlight our newly announced partnership with Team USA and the Los Angeles 2028 Olympic and Paralympic Games. In recent periods, we have made significant investments in technology and capacity, and given our market position as the second largest producer of mortgage loans and the sixth largest servicer in the country, we are well positioned for sustained investment in our brand. This strategic four-year partnership is a powerful catalyst for our business. It will elevate our brand with our customers, business partners, and employees while connecting PennyMac with the shared values of respect and excellence embodied by the U.S. Olympic and Paralympic movement. Team USA has a massive fan base, offering unparalleled reach, and brand association with the Olympic and Paralympic Games drives increased engagement, memorability, and ultimately greater customer consideration. This marks the first significant investment in our brand, building upon our established success in performance marketing. We expect the partnership to boost both portfolio recapture and non-portfolio customer acquisition with integrated campaigns and athlete partnerships that deliver the message of the importance of home and homeownership. Additionally, this partnership is a key driver in our strategy to expand our market share in Broker Direct. Our association with Team USA will also foster a stronger sense of pride and purpose among our employees. As we look to grow our employee base, this partnership increases PennyMac's value proposition as an employer of choice. It is important to note that this partnership is a strategic four-year investment that we've structured to align with our financial discipline. The related expenses will be lower in the early years of the partnership, gradually building into the culmination of the Los Angeles 2028 Games. This phased approach allows us to strategically build brand relevance, awareness, and engagement without significant upfront costs. We are incredibly enthusiastic about the opportunities this partnership presents and its potential to drive significant value across all facets of our business. Now, turning to the origination market, current third-party estimates forecast total originations of $2 trillion in 2025, reflecting projections for growth and overall volumes with moderate contributions from both refinance and purchase. Despite broader economic volatility, industry consolidation, and regulatory change, we remain intensely focused on the organic growth of our servicing portfolio and the continued development of our balanced business model, and we are committed to successfully navigating this economic landscape without distraction. As we've highlighted on slide seven, our synergistic relationship with PennyMac Mortgage Investment Trust, or PMT, continues to provide us with a unique competitive advantage. Our deep and experienced management team has built the best-in-class operating platform that includes a large and agile multi-channel origination business and a scaled servicing operations, both supported by industry-leading technology and processes we've thoughtfully developed over our long history. As we have demonstrated, this strategically built platform provides us the ability to generate strong returns for our stockholders across different market environments. As a mortgage REIT, PMT provides a tax-advantaged balance sheet to hold and invest in long-term mortgage assets. This model enables PFSI to generate capital-like recurring revenue streams in the form of servicing fees, fulfillment fees, and management fees. PFSI's deep access to the origination market, combined with PMT's ability to execute private label securitizations and retain the related investments, provide both entities the opportunity to capitalize on the evolving landscape for secondary market execution should the GSEs reduce their overall footprint. We have repeatedly demonstrated that our balanced and diversified business model, with leadership in both production and servicing, and our dynamic hedging program enables strong financial performance and a foundation for continued growth as an industry-leading mortgage company, regardless of the direction of interest rates. As you can see on slide eight of our presentation, we have produced operating returns on equity in the mid-teens during periods of higher rates, with the potential for increased returns when mortgage rates decline, as evidenced by our performance in the third quarter of last year. Our large servicing business provides ongoing revenue and cash flow contributions in this higher-rate environment and continues to provide the foundation for strong financial performance in the future. The unpaid principal balance of our servicing portfolio increased 2% from the prior quarter and 10% from March 31, 2024, as production volumes more than offset runoff from prepayments. Because we retain the servicing rights on nearly all mortgage loan production and have been one of the largest producers of mortgage loans in recent periods, we are uniquely positioned in the industry. Our large and growing portfolio of borrowers who recently entered into mortgages at higher rates stand to benefit from a refinance in the future when interest rates decline, positioning our Consumer Direct Lending division for strong future growth. On slide nine of our earnings presentation, you can see that as of March 31, $240 billion in unpaid principal balance, or 35% of the loans in our portfolio, had a note rate above 5%. Approximately $107 billion were government loans and approximately $133 billion were conventional and other loans. The opportunity for earnings growth is highlighted on this slide, along with our historic refinance recapture rates, which have improved significantly from five years ago as a result of our ongoing technology enhancements and process improvements. We expect these recapture rates to continue improving given our multi-year investments, combined with the increased investment in our brand, as mentioned earlier, and use of targeted marketing strategies. Slide 10 illustrates the advantages of growing our servicing portfolio organically via our own production, a key differentiator for PennyMac Financial Services. We can consistently source loans through different channels depending on the market environment, and our servicing portfolio growth has been more consistent than others that grow primarily through bulk acquisitions. Loan-by-loan processing gives us the ability to perform diligence and compliance reviews for all of the loans we produce and ultimately service, leading to increased fraud detection and minimal defect rates versus bulk MSR purchases. This is evidenced by the strong historical performance of our MSR assets with lower delinquencies, especially in recently originated loan vintages relative to the broader industry, which validates the efficacy of our prudent credit strategy. As I briefly discussed, our large and growing servicing portfolio is a key asset, anchoring our core operational results in this higher interest rate environment and driving low-cost leads to our Consumer Direct division. On slide 11, you can see the strong revenue contributions from our servicing portfolio in recent periods, with growth driven by our portfolio expansion and the higher proportion of owned servicing in recent periods, as well as increased placement fees due to elevated short-term interest rates. Throughout our history, we've been focused on deploying new and emerging technologies to drive efficiencies and lower costs, as evidenced by the chart on the right, which highlights the continued decline in our per-loan servicing expenses in 2019. We continue to demonstrate the ability of our servicing workflows and technology to scale efficiently with our growth, while also providing our servicing associates with the tools they need to best serve our customers. Given our best-in-class proprietary technologies with advanced capabilities and our unmatched excellence in servicing, we are committed to expanding our sub-servicing business beyond PMT, and we deliver a compelling value proposition to MSR owners. This includes superior capabilities for both performing and non-performing loans powered by our proprietary technology and extensive customer self-service capabilities. MSR owners that utilize PennyMac as a sub-servicer can leverage our robust marketing and recapture tools to generate leads and best support their origination efforts. On slide 12, you can see we've signed our first three clients with one already onboarded, and we are actively engaged with 20 additional prospects that represent approximately $65 billion in UPB. Beyond that, we estimate our correspondent sellers collectively own approximately $465 billion in unpaid principal balance of servicing, and that the total addressable market for sub-servicing is approximately $4 trillion. Given consideration to changing market dynamics, we expect further market penetration, aiming to capture a broader share of MSR owners who are seeking a best-in-class low-cost sub-servicer. This strategic focus on sub-servicing is a testament to our commitment to diversifying our revenue streams while maximizing the value of our servicing platform. It is for all of these reasons that I am confident in our ability to continue driving strong financial performance in this volatile environment, no matter the direction of interest rates. I will now turn it over to Dan, who will review the drivers of PFSI's first quarter financial performance. Thank you, David. PFSI reported net income of $76 million in the first quarter for $1.42 in earnings per share for an annualized ROE of 8%. These results included $99 million of fair value declines on MSRs, net of hedges and costs, and the impact of these items on diluted earnings per share was negative $1.35. PFSI's board of directors declared a first quarter common share dividend of $0.30 per share. Beginning with our production segment, pre-tax income was $62 million, down from $78 million in the prior quarter. Total acquisition and origination volumes were $29 billion in unpaid principal balance, down 19% from the prior quarter and consistent with a decline in the overall market. Of total acquisitions and origination volumes, $26 billion was for PFSI's own account and $3 billion was fee-based fulfillment activity for PMT. Total locked volumes were $34 billion in UPB, down just 6% from the prior quarter. PennyMac maintained its dominant position in correspondent lending in the first quarter, with total acquisitions of $23 billion, down from $28 billion in the prior quarter. Correspondent channel margins in the first quarter were 27 basis points, unchanged from the prior quarter. Fallout-adjusted locks for PFSI's own account were down from the prior quarter, which drove a lower revenue contribution. PMT retained 21% of total conventional conforming correspondent production, up slightly from 19% in the prior quarter. In the second quarter, we expect PMT to retain approximately 15%-25% of total conventional conforming correspondent production, consistent with first quarter levels. Of note, pursuant to our renewed mortgage banking agreement with PMT, beginning in the third quarter of 2025, all correspondent loans will initially be acquired by PFSI. However, PMT will retain the right to purchase up to 100% of non-government correspondent loan production. In Broker Direct, we continue to see strong trends and continued growth in market share as we position PennyMac as a strong alternative to channel leaders. Originations in the channel were down 21% from the prior quarter, as many of the loans locked when rates declined in the third quarter of 2024 funded in the prior quarter. Locked volumes in the first quarter were up 23% from the prior quarter as we continue growing our market position and as we enter the spring and summer home buying season. The number of brokers approved to do business with us at year-end was over 4,850, up 19% from the end of last year, and we expect this number to continue growing as top brokers increasingly look for strength and diversification in their business partners. Broker channel margins were down slightly from the prior quarter, as lower industry volumes resulted in more competitive pricing. We saw similar volume trends in Consumer Direct, with origination volumes down 24% from the prior quarter, but locked volumes up 6%. Margins in the channel were up due to a larger mix of higher margin closed-end second liens during the quarter. Activity across our channels in April has been up, reflecting lower mortgage rates in the beginning of the month and typical seasonality. Production expenses, net of loan origination expense, increased 5% from the prior quarter, partially due to seasonal compensation impacts. It is our preference to hold a level of excess origination capacity in the current market environment, given our belief that volatility in interest and mortgage rates will provide pockets of opportunity from time to time and that we will need to be quick to react. Turning to servicing, the servicing segment recorded pre-tax income of $76 million. Excluding valuation-related changes, pre-tax income was $172 million, or 10.2 basis points of average servicing portfolio UPB, down slightly from 10.3 basis points in the prior quarter. Loan servicing fees were up from the prior quarter, primarily due to growth in PFSI's own portfolio. Custodial funds managed for PFSI's own portfolio averaged $6.2 billion in the first quarter, down from $7.3 billion in the fourth quarter due to seasonal impacts and lower prepayments. As a result, earnings on custodial balances and deposits and other income decreased. Realization of MSR cash flows increased from the prior quarter due to continued growth in the owned portfolio and expectations for higher prepayment activity in the future. Operating expenses were essentially unchanged from the prior quarter at $81 million, or 4.8 basis points of average servicing portfolio UPB, down from 5 basis points in the prior quarter and representing an all-time quarterly low level. We seek to moderate the impact of interest rate changes on the fair value of our MSR asset through a comprehensive hedging strategy that also considers production-related income. For example, when refinance volumes and production-related income are highly responsive to changes in interest rates, our targeted hedge ratio can decline to as low as 60%. When refinance volumes and production-related income are less responsive to changes in interest rates, our targeted hedge ratio can increase to as high as 100%. The fair value of PFSI's MSR decreased by $205 million in the first quarter. Of that, $183 million was due to lower market interest rates, which drove expectations for higher prepayment activity in the future, and $23 million was due primarily to prepayments that were faster than modeled and other factors. Excluding costs, hedging gains were $131 million. Hedge costs were $24 million. Our targeted hedge ratio moved lower during the quarter as interest rates declined and other factors such as the change in the shape of the yield curve had a slightly negative impact. Each of these two factors decreased our hedge effectiveness during the quarter by about 10% versus the 90%-100% range previously communicated. At current rate levels, our targeted hedge ratio is in the 80%-90% range. Thus far, in the second quarter, interest rates have been extremely volatile. As a result, our hedge target ratio has varied, and it may change throughout the quarter if this level of volatility continues. Additionally, hedge costs thus far in the second quarter have been elevated. Corporate and other items contributed a pre-tax loss of $34 million compared to $36 million in the prior quarter. PFSI recorded a provision for tax expense of $28 million, resulting in an effective tax rate of 26.8%. In February, we successfully issued $850 million of unsecured senior notes due in 2033 and used proceeds to reduce the outstanding balance of our secured revolving bank financing lines. Regarding the upcoming maturity of $650 million in unsecured senior notes due in October of 2025, we have ample liquidity to retire the notes with additional flexibility to draw on our available revolving bank financing lines. We ended the quarter with $4 billion of total liquidity, which includes cash and amounts available to draw on facilities where we have collateral pledged. We'll now open it up for questions. Operator? I would like to remind everyone we will only take questions related to PennyMac Financial Services, or PFSI. We also ask that you please keep your questions limited to one preliminary question and one follow-up question, as we'd like to ensure we can answer as many questions as possible. If you would like to ask a question during this time, simply press * followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, it's *one. Your first question comes from the line of Michael Kaye with Wells Fargo. Please go ahead. Good afternoon. There's been an uptick in M&A in the sector, particularly Rocket's acquisition of Mr. Cooper. I wanted to see if you felt this was a greater competitive threat, perhaps in a correspondent channel, and maybe perhaps on the contrary, could create some more sub-servicing business. Maybe just some thoughts on that. Yeah. Hi, Michael. How are you doing today? Great. Thank you. Good, good. Look, there has been with this transaction, there's been a lot of discussions that have been taking place in the industry. I have tremendous respect for both management teams and the businesses they built. I take great comfort in our earnings stability over the years, and it's demonstrating the power of the balanced business model. While this transaction may try to duplicate that, I think what we've created is so powerful that I don't know if it can be duplicated. We are going to continue to focus on organic growth of our servicing portfolio and continued development of the balanced business model. We don't have any distractions here at the company, and I don't know if others in the industry can say the same thing. We're going to continue to be the number one correspondent aggregator, and we're going to continue our dominance there. Our dominance there comes from the fact that our ability to process at a cost structure that I've not seen anywhere else in the industry is not something that can be easily duplicated. I think that we have tremendous opportunity in our Broker Direct channels. You can see year over year, we've grown our market share from 3.5% to almost 5%, and we're well on our way to achieving our 10% market share goal by the end of 2026. I think on the sub-servicing front, suffice it to say we're in great position to deal with any concerns about what's happened in the sub-servicing business over the past three years. There's been players leaving and players not growing and players changing their business models. We believe that we offer a great value proposition on the sub-servicing channel. Look, sub-servicing is a capital-light business that we want to continue to emphasize throughout the organization. It's through our relationships with our correspondent aggregators as well as our reputations as a management team that I believe is going to continue to allow us to be one of the leading sub-servicers in the industry. Okay. Thank you for that. I wanted to see if you could talk about the impact on your unit economics with some of the changes in the FHA loss mitigation programs, including to partial claims and payment supplements. Sure. Look, I'll start off by saying the new loss mitigation waterfall is largely in line with our expectations. I think it's been carefully thought out. We've been having discussions with FHA and the prior administration about it, carried forward, and this administration. The changes are manageable. The limitation for mods is one in 24 months versus 18. I think this is more than workable for borrowers, servicers, and the FHA. I believe it's going to it will improve redefault rates as well as wring out the bad actors in the industry. There's a greater priority for mods versus partial claims. What we lose in mod income will more than make up for in EBO activity. That is where I believe we are best positioned in the industry. As you all know, during COVID, we had tremendous success with EBO activity. It starts with having a strong risk management discipline, the ability to hedge EBOs, the ability to buy out the loans, get them reperforming. Our expertise in default servicing really shines through in those situations. Having the infrastructure in place to handle EBOs is important. That infrastructure is capital markets expertise, credit facilities in place, understanding when to buy out the loans, when to redeliver them. I am viewing this as really a positive of sorts from a P&L perspective. I do not take comfort in borrowers losing their properties. I think from an accounting impact, I do not view it negatively. As I said, it is going to reduce loss mitigation, but it's going to mark a return to more orderly property disposition in the way the market has historically operated. Finally, I'll tell you, I think for borrowers who unfortunately can't get a mod, we're in a much different environment than we've been in in the last, call it, 20 years. Borrowers have a lot of equity, and there's housing supply issues. With the strong demand for housing, I think if a borrower unfortunately has to get a deed in lieu of foreclosure or a short sale or foreclosed upon, the disposition of the properties will be in a more orderly fashion. Okay. Thank you so much. Your next question comes from the line of Doug Harter with UBS. Please go ahead. Thanks. Can you talk about your outlook for continued cost efficiencies on both the servicing and the origination side, the ability to continue to scale those businesses, and what role technology, including AI, might play in that? Yeah. Look, Doug, I'm really excited about the work that's being done in both servicing and our loan production divisions, really with the sole goal is to drive down the costs. Okay? I think AI is clearly where the focus is. We're working with our business partners like Google and Amazon to realize efficiencies. We've set up an AI team in our technology group to really provide bandwidth to our business leaders to help identify opportunities where AI can be deployed, as well as we can work with our third-party vendors who are investing in AI. I'm seeing more and more deployment of chatbots across the organization that will increase productivity. I have no doubt that we're going to see benefits. I'll give you a few examples in a minute. We're going to see a shortened timeline for getting loans originated and sold in the capital markets. Right now, we're focused on LO efficiency in our fulfillment area. All this is also going to find itself in creating a better customer experience. On the servicing front, we are uniquely positioned. Having SSE gives us the ability to customize and integrate AI into our system. We've automated 20 different processes in servicing. Just to give you an example, in servicing, we have a servicing customer interaction system called Mac Chat that allows customers to engage with PennyMac on a 24/7 basis. Its annualized savings for us has been over 45,000 hours a year, roughly translating to $2 million a year in savings. In servicing, we have a servicing document processing and process automation system that has saved us over $2 million a year or 130,000 hours. Finally, in TPO, our Broker Direct channel, we've instituted a document processing system that allows us for full indexing and creation of loan closing document packages that have saved out-of-pocket expenses to the consumer of $7 a loan. We'll be, on a go-forward basis, exposing more and more of this activity. I am really enthusiastic and proud of the work that's getting done. Thanks, David. Your next question comes from the line of Crispin Love with Piper Sandler. Please go ahead. Thank you. Good afternoon, everyone. In recent quarters, you've been pretty vocal on expecting episodic rate moves. We've seen that with rate volatility driven by the macro. As you mentioned, April volumes started off strong. Have you seen a significant drop-off in recent weeks relative to earlier in the month in volumes or lots just following the recent moves in rates? Look, we've seen declines in activity, but not as much as one would expect. I'll tell you, first of all, in correspondence, there's a lag in terms of the correspondent activity of about, I would call it, 45-60 days. The increased activity we saw earlier in the month will avail itself later in the month or the beginning or in May, in terms of correspondent activity. In terms of our consumer direct and Broker Direct channels, we have a lot of ourselves for consumer direct. We have a lot of loans that are in the high sixes, low sevens. In the marketplaces, you can see in our earnings materials, there's a large number of these loans. I think with the volatility in rates, when borrowers see that they have a loan that they can refinance and it meets a goal, the idea of waiting for rates to go lower is not really playing into their thinking. There is just greater clarity of the market and what the kind of the break-even is for borrowers. I believe they're taking the position that they're going to refinance the loan. If rates come down further, then they'll refinance again. Great. Thank you, David, for that. Also related to the rate volatility that we've seen in April to date and the last few quarters, can you discuss the MSRF hedge in a little more detail? On slide 19, you do call out that the hedge ratio can decline to around 60% when refinance volumes are highly responsive to rates, but you are targeting 80-90%. Can you dig a little bit deeper into near-term expectations and the key sensitivities you'd expect to impact the hedge effectiveness? Sure. Through the quarter thus far, we've obviously had a pretty significant amount of interest rate volatility. I think in one of the weeks earlier in the quarter, we were up and down, covered 70 basis points within a week. That has some impacts in terms of, A, what our targeted hedge ratio is, that accompanies our expected production income, as well as the hedge costs that we experience. The increasing volatility, with the increasing volatility, that did increase our hedge costs here earlier in the quarter from what we experienced in the first quarter, given the significant increase in overall move as well as the impact on option costs. That has run a bit higher than we saw in the first quarter. Overall, in terms of the rate moves and the pretty significant whippyness that we've seen, the team has really, I think, done a good job in terms of insulating us from that and minimizing the overall rate impacts that we've experienced quarter to date, apart from, as I mentioned, the increased hedge costs that we've had through the first part of the quarter. Great. Thank you. I appreciate all the color. Your next question comes from the line of Bose George with K BW. Please go ahead. Hey, guys. Good afternoon. Just wanted to follow up on that MSR hedging question. I mean, I can understand why certain backdrops create a lower hedge ratio. It seems like in the past, there were some times where hedge ratios would be lower, sometimes it'd be over 100%, and it would kind of net out over time. Based on the commentary on that slide, it seems like now the hedge ratio is probably ranging between 60% and 100%, which suggests that the gap ROE is going to be somewhat lower than the operating over time. Can you just talk about that? Has something changed in terms of how you view the hedging or how you do it? Or yeah, just any commentary on that would be great. I mean, I think we're just really trying to lay out, since we discuss this on a regular basis, lay out what our hedging philosophy is. In periods where rates are, I'd say, generally lower, the mortgage market is bigger, and there's more variability. There's more overall refinance volume and more variability with respect to rates on production income. Typically, we would allow our hedge ratio with respect to rates to be lower. What that really means is that we would see increases in overall value when interest rates go up, as we saw in 2022, where we had a positive contribution from the increase in MSRs versus our hedges. Commensurately, if interest rates decrease, we'd see more of an overall decline. What we've really sought to do here on page 19, and we'll give a bit more clarity to this going forward, we've talked about it, is identify, apart from those rate impacts and sort of the effectiveness versus what our target has been, the hedge costs that are impacting us during the quarter, and then if there's any other assumptions that have impacts. That's really what we've laid out. In the current environment, where the yield curve, at least from the short rates compared to the longer rates, has been flat to inverted and overall volatility has been high, that would lead to some negative hedge costs as we had in the first and, as I alluded to, in the second quarter. As the yield curve normalizes somewhat or becomes steeper with respect to, again, short rates versus longer rates, and as overall vol declines, we would expect those hedge costs can get lower. Potentially, we've seen periods of time where they're positive. The overall impact of just the rate impacts quarter over quarter would comprise more of the total that you would see on a quarter-to-quarter basis. Like I said, could really be balanced whether we see a positive impact or negative impact in any given quarter. Okay. Great. I think over an extended period, is it fair to say you expect your gap ROE to equal your operating ROE over, I mean, not over quarter to quarter, but over a multi-year period? Is that fair? It would depend a bit on it would depend a bit on the shape of the yield curve and volatility. I think if we look back just historically over at least recent periods, we've seen that there's been a negative hedge cost impact. Certainly, if we look over longer periods of time and the way that we've positioned ourselves, there's opportunities for both positive impacts and negative impacts, as you said. Okay. Great. Let me just actually, one more on mortgage volumes. I mean, to the extent that interest rates stay where they are with mortgage rates closer to 7%, do you think there's any risk to estimates, or do you feel like there's probably enough volatility where you'll get those periodic refinance waves? Maybe that's kind of the way to get to the $2 trillion-ish that the MBA is forecasting. Yeah. The $2 trillion that the MBA is forecasting, I think, is really most likely requires some amount of interest rate volatility, as we've seen in periods we saw earlier this month, that drives some episodic refinance volume. I'd say the other piece that should drive higher over time is also related to housing turnover, where, as David noted, there's a pretty significant demand. I think that there's continued pent-up demand for housing as well as for folks to move out of whatever house they may have outgrown. There is some upward lift from that, even at current rate levels versus the prior year. I think there will need to be some contribution from refinances related to dips in rates during the year to reach that $2 trillion mark. Okay. Makes sense. Thanks. Your next question comes from the line of Eric Hagen with BTIG. Please go ahead. Hey, thanks. It looks like a really healthy recapture rate, but a couple of questions there. Are most of the loans that you're currently recapturing because of rate and term refinances, or are they purchase recapture because borrowers are moving from one home to another? On the loans that you're not recapturing, what is the explanation maybe for that? Look, Eric, as you point out, recap rates have improved meaningfully. I will tell you most of the loans are coming from rate and term. It speaks to the legion technology and processes that we put into place to give us better capability to categorize and mark-to-market the in-the-money customers to be able to recapture the loans. We're working harder and harder on the purchase recapture front. That is one of the drivers to investing in the brand. I think it's important that we continue to impress upon our customers and non-customers to be able to have our name associated with the mortgage loan origination process to be able to get purchase recapture as well as purchase money transaction. Look, we're going to be keeping an eye on the increase in percentage of non-port originations as well as increase in recapture. It is rate and term. I think this is something that, given the volatility in the market, you're going to see more and more of this improvement in recapture. Yep. Okay. That's helpful. Can you also say how you deployed the proceeds from the unsecured debt that you raised in February and how much flexibility or even the appetite that you have to pay down the bilateral MSR financing lines from this point? Can you maybe also remind us, are all of these secured MSR lines subject to margin calls, or does the margin call only apply to some of the funding there? Sure. The proceeds from the $850 million unsecured debt raise were used to pay down the bilateral MSR financing lines. That really gives us great flexibility. Obviously, we can redraw on those lines once we've repaid them because the collateral is still outstanding. All of those lines are subject to mark-to-market. As we've noted, based on the collateral that we have today, we have over $3 billion of capacity to be able to draw against those lines. From a practical perspective, even if we had significant interest rate volatility today, we would not face a margin call at this point in time because we have so much excess collateral. We are in a very good position with respect to our overall financing capacity. As we approach our maturity that is coming up later in the year, we will be looking for opportunities in the market to potentially issue additional unsecured debt. To the extent that the market is not conducive, we have significant capacity. We have significant capacity on our financing lines to be able to pay down that maturity. One other item, too, is that if interest rates rally, another important component of this is that as interest rates rally, if we do see a decrease in the value of our MSR asset, we are hedging the MSR, and so we do have offsetting hedge gains against that. That would be inflows from a cash perspective. Even if we were more fully advanced, that is a component of our hedge program that would allow us to pay down that debt with those hedge proceeds. Yep. Okay. That's helpful. Thanks. Really helpful detail on the volume in April, but how have margins trended this month? It sounds like maybe there's been some hedging noise, but if you strip out that pipeline hedging, like on a gross basis, if you will, can you say how margins have stacked up? Overall margins thus far in the quarter have been, let's say, a little bit tighter than what we saw in the first quarter. Obviously, there's been a pretty significant amount of volatility, but have been a little bit more competitive than we saw through the full first quarter on the correspondent side. Really in the direct channels, I would say, have not even been tighter, have been pretty similar. In Consumer Direct, given the refinances that the refinance locks that we saw, given the interest rate rally, those on a basis point basis tend to be a bit lower than what we see on some of our second liens. To the extent that we have had more refinance locks than we proportionally did in the first quarter, our overall basis point margin is lower, but our dollar-per-loan margin is higher. Those have been the dynamics that we have seen quarter to date thus far. Gotcha. Helpful. Thank you guys so much. Your next question comes from the line of Shaniku with Barclays. Please go ahead. Hey, guys. Thanks for taking my question. You guys mentioned the mid to high teens ROE guidance, but it contemplates stable delinquencies. Can you quantify where you would need to see delinquencies rise to make an impact on the ROE guidance? Yeah. Overall, we'd need to see a pretty significant or concentrated increase in delinquencies to have a meaningful impact on the ROE guidance. That would really have to be in the absence of any accompanying decrease in interest rates. A decrease in interest rates would drive up additional production income and EBO income, which would be offsetting to potential increases in costs from delinquencies. Overall, we would need to see delinquency increases pretty meaningfully outside the ranges that we've seen for the last few years or quarters, which have ranged up, if you look over the past year, have been within a, call it a 1% range. We'd need to see really multiples of that to get to impacting in a meaningful way the ROE guidance. Thanks. I guess that EBO, you guys obviously did pretty well in that during COVID, but we saw massive rate declines. I guess in this environment where you have changes in the loss mitigation programs and rates potentially staying higher for longer, how should we think about EBO income or your ability to modify potential increases in delinquencies in that environment? Look, I think in a higher rate environment, you obviously do not have as much firepower in terms of the rates that are being offered to the borrowers. I think there is still, between the 40-year mod and other programs in place, I do think that there will be opportunity to drive incremental EBO volume. Obviously, to Dan's point, if you see delinquencies increasing, typically you see a rate decline that comes with that, which leads to more EBO opportunity. I think there is, we're seeing some data that shows that rates decline, and you see borrowers with higher note rates that do default, that do need modification programs, there will be more EBO opportunity. Thank you, guys. We have no further questions at this time, and I'll turn it back to David Spector for closing remarks. I just want to thank everyone for joining us today. If you have any questions, please don't hesitate to reach out to our IR team. Again, thank you for your time.